Managing the trade deficit

Pakistan incurred a record external trade deficit of $6.5 billion in the first seven months of this financial year ending June 2006. That marks a leap of 127.3 per cent over the deficit of $2.858 billion recorded in the same period last year.

That has happened despite the rise in exports by 23 per cent in the same period last year as the imports rose by $15.8 billion against the exports of $9.303 billion. While the trade deficit in seven months has risen to $6.5 billion the ceiling for the deficit for the whole year is four billion dollars — exports $17 billion and imports $21 billion.

But the record deficit need not upset the government or the country, assures Dr Ashfaq Hassan Khan, economic advisor to the ministry of finance. He says the increase in home remittances, foreign investment, the portfolio investment, the foreign exchange reserves and the loans, which the government can take, can soften the yawning deficit.

These inflows have reduced the current account deficit raised high by the high priced oil imports to three billion dollars which is again a record. The home remittances have risen to $2.4 billion in seven months which marks a growth of eight per cent as compared to the same period last year. The year is expected to end with four billion dollars as Pakistanis are reluctant to keep their earnings abroad in view of the prying western eyes.

Foreign investment this year is expected to be over three billion dollars in view of the stepped-up privatization, says Minister for Privatization Hafeez Sheikh. Bids for the sale of PSO and Pakistan Steel are to be invited by March 10. The PTCL deal will be formalized this week and the transfer of management will be completed this month. The privatization of Sui Northern Gas pipeline company and Sui Southern is to be expedited. Indian investors too are interested in acquiring them. The government does not seem to be opposed to that at the moment.

Of course, large loans can be raised abroad to meet the governments needs. In fact the government is coming up with a sovereign loan soon following the two loans floated last year and the year before. In addition Pakistan will be receiving the bulk of the $6.5 billion donations and loans for the earthquake relief and reconstruction offered by the international donors spread over the next few years. While the government can manage the large trade deficit with assistance from various sources, the foreign exchange reserves are coming down instead of going up. They are already around $11.5 billion from $12.5 billion.

In spite of the large deficit in external trade and the sizable current account deficit, economic growth during the first six months of the financial year has been 6.4 per cent against a target of seven per cent, says the planning commission. Agriculture grew by three per cent, large-scale manufacturing by 12 per cent and services by eight per cent. The modest setback from the seven per cent target is due to the agricultural fallback particularly in cotton by 15 per cent. But investment was low at 18.1 per cent and savings a poor 15.9 per cent.

Vigorous efforts are being made by the government to promote trade with friendly foreign countries. Attempts have been made to have more trade by signing FTA (Free trade area agreements), which of course is a slow process. Such deals are being negotiated with big countries like the US and China and small countries like Sri Lanka, Bangladesh and Malaysia. Meanwhile, the efforts are to increase the volume of trade with all of them.

The visit of Bangladesh Prime Minister Khalida Zia to Pakistan has been very productive in terms of agreements reached. She talks of the immediate policy of a two billion dollars trade and four to five billion dollars trade in four to five years. She wants an FTA agreement with Pakistan by September and makes concrete moves in that direction. She wants to set up a working group which will meet once in two years.

Four memoranda of understanding were signed during her visit which covers cooperation in areas of Agriculture, Tourism and exports and standardized quality control.

Until recently a billion dollar trade between Pakistan and Afghanistan seemed more like a dream but now President Karzai is talking of the $1.4 billion actually taking place between the two countries. That could be because more items have been included in the Afghan Transit trade list compared to the past.

President Karzai also proposes to build industrial zones along the border with Pakistan to provide employment to the people of the area. We will now have a more formal economic cooperation with Afghanistan through the TAP — Turkmenistan, Afghanistan, Pakistan gas pipeline. The Asian Development Bank which will be funding the gas pipeline has been assured that the gas supply from the Central Asian republics can last for thirty years.

On the Saarc front the long-awaited Safta has been formally approved by the cabinet for ratification. Although it is effective from January 1, it is to be operational from July 1. And yet it will not be fully operational from that date, as Pakistan has not given the most-favoured-nation status to India in the matter of trade. India has given that status to Pakistan.

Commerce Minister Humayun Akhtar says there could not be normal trade between the two countries until the political issues are settled and, in particular, a way is found for the solution of the Kashmir issue. Meanwhile the trade will be governed by the positive lists on both sides and Safta will not effect the sensitive items from tax relief.

But the political disputes stand in the way of full trade between the two countries, the essential items in short supply in Pakistan are being imported from India through special arrangements. On that basis, 20,000 tons of sugar was imported from India last week and more will come to meet the shortage of a million tons.

The first FTA agreement Pakistan signed with Sri Lanka last year but little of trade has taken place following that, protested Sri Lankan trade delegation that visited Karachi last week. The scope for trade between the two countries is large but the actual performance is poor. The fault is not of the government alone.

The businessmen on both sides should have been more enthusiastic in promoting larger trade. And now following the visit of President Musharraf to China thirteen agreements have been signed between the two counties which covers cooperation in vast areas like defence, economy, social welfare and even family planning. China has also set apart $300 million for Pakistan to but goods from China.

Although more and more foreign investors are showing keen interest in investing in Pakistan, frequent violence on the streets discourages them. They are shocked by the manner three Chinese engineers working on a private sector energy project were shot dead in Balochistan. They are also upset by the violent demonstrations and deaths in the course of such protests against the cartoons denigrating the Holy Prophet in western newspapers. The strike and violent demonstrations have cost economic losses for the foreign investors as well.

Investors from Canada, Germany and Australia as well as the US are interested in making investments in industries in Pakistan. And so are the investors from Saudi Arabia, UAE and other Gulf states as well as Malaysia and Singapore. They must be encouraged and assisted in every possible manner.

Foreign investment in the mobile phone sector is indeed very large. The number of phones from 2.5 million to 20 million within a short time.

Meanwhile, in spite of the political threat to the Iran-India-Pakistan gas pipeline from the US, the petroleum ministers of India and Pakistan met in New Delhi last week and reaffirmed their commitment to build the pipeline. Technical discussions will follow soon for erecting the seven billion dollars pipeline. India is interested in the TAAP too and its representative was present in the talks in Turkmenistan. The ADP will fund its construction.

Meanwhile, the government borrowing has overshot the target by 6.18 per cent and the US has announced an aid of $1.5 billion spread over 5 years for promoting Education, public health, good governance and promotion of economic growth. Is that in addition to the long term economic and defence assistance announced earlier or merely a repeat of that offer?

Following popular dissatisfaction with the official statistics and the working of the statistical division the government is creating a new Pakistan Bureau of Statistics. It will comprise the census and survey offices, resource management and support services division and the statistical division.

Earlier it was said if the statistical department or bureau was turned into a division with an independent secretary we will get more reliable statistics. We have not. So one more change and the omnibus new organization is called the Bureau of Statistics. Let us hope it will do better and provide us with reliable figures.

Meanwhile, a new labour survey says that 52.4 per cent of the people are literate. As late Dr Mahboob-ul-Haq used to say what matters is not nominal literacy but functional literacy which is much smaller. The number of the unemployment is shown as seven per cent, which is much too low. If that is true we are better than most European countries.

Meanwhile the national steering committee on Women’s employment has approved a plan to promote decent employment for women. What matters is the plan in action and how many women it helps to employ in decent jobs. As long as we do not have reliable figures of employment and unemployment we may not know the dimension of the problem and make earnest efforts to find solution to the serious problems.

Nobel peace prize down the ages

SINCE the Nobel prizes were first instituted in 1901, they have acquired a dignity of purpose and a purity of intent that makes one forget, as do flawless white lotus blossoms growing out of a muddy lake, the murkiness from which they originate.

Everyone knows but chooses not to remember that the source of Alfred Nobel’s wealth came from the invention of dynamite. In an act of contrition, he willed his considerable fortune to the establishment of five prizes for outstanding achievement in physics, chemistry, medicine, literature and peace. To these five, a sixth category was added in 1969, recognizing the newest of modern sciences — economics.

To cynics, Nobel’s belated endowment was inherently suspect; it was almost as if Al Capone had endowed a university chair in good corporate governance. Over the past hundred years or so, the Nobel prizes have become benchmarks of excellence in fields that have been of benefit to mankind. While the yardstick applied to the award of prizes in chemistry, physics and medicine have remained usually beyond debate, the measure used for the selection of prize-winners for literature and economics have often generated controversy.

If every victory has a thousand fathers, every Nobel prize-winner has discovered that he or she inherits a thousand disappointed siblings, and none more so than the Nobel Prize for Peace. Since the award of the first prize in 1901 to Henry Dunant (originator of the Red Cross) and Frederic Passy (founder of the International League for Permanent Peace), the selection of the awardees has shifted away from individuals to institutions, such as the Permanent International Peace Bureau (1910), the Nansen International Office for Refugees (1938), and the International Red Cross (1944). Understandably, no one won the prize during the years of the First and the Second World Wars (fought by armies using Nobel’s inventions).

Between 1945, when peace was declared, and 1972, on six occasions no one was considered worthy enough to be awarded the Nobel Peace prize and the moneys were recycled into the Foundation’s Main Fund. In 1960, a dramatic shift occurred when the peace prize was awarded to a black South African — Chief Albert Luthuli — as a symbol of the West’s belated abhorrence of apartheid. Four years later, Dr Martin Luther King — also black — received the award as a symbol of Europe’s belated abhorrence of American segregation.

In 1973, however, the selection committee moved away from its traditional criteria and chose to reward not a peacemaker but a warmonger and his victim. Dr Henry Kissinger and his Vietnamese nemesis Lee Duc Tho were made joint beneficiaries of the peace prize not so much for bringing about peace as for negotiating a ceasefire, in effect an undertaking not to exterminate each other.

In 1978, it was the turn of another Gemini pair of arch-enemies — Egypt’s Anwar al Sadat and Israel’s Menachem Begin. They were seen by the Nobel committee as the modern incarnations of two earlier peace-makers — Egypt’s pharaoh and Israel’s King Solomon who the Nobel committee noted had signed a peace treaty 3,000 years before.

The 1993 peace prize went jointly to Nelson Mandela who endured 26 years of imprisonment in South Africa and to the last of his Boer jailers, Frederik de Klerk. The committee lauded their work for the peaceful termination of the apartheid regime, and then had to witness the unrepentant wife of de Klerk object to the placement of Mandela next to the Norwegian prime minister on stage. Mandela’s combative wife Winnie was equally outspoken: “It was an insult to give it to him jointly with his jailer. It was a bribe, part of a gigantic plot to make him an instrument of peace for the white man.”

The year after, the three beneficiaries were Yasser Arafat, Shimon Peres and Yitzak Rabin for their efforts to create peace in the Middle East. The justification was that rather than waiting for an end-condition of ‘perpetual peace’, it should be the efforts towards that end that merit the reward. In the alliterative words of the judges, ‘every award must contain an element of entering into a process, a process with a promise of peace.’

In 2001, the Nobel peace prize was awarded both to the United Nations and to its Secretary-General Kofi Annan. The UN was and still is seen by many member states as an over-staffed, over-paid bureaucracy, which occasionally remembers to parrot Article 1 of the UN Declaration of Human Rights: ‘All human beings are born free and equal in dignity and human rights. They are endowed with reason and conscience and should act towards one another in a spirit of brotherhood.’ Even non-Iraqis suspected a star — spangled intervention in the selection process intended to apply pressure on Kofi Annan to side with the US-led coalition in the war on Iraq. Kofi Annan walked away with the prize, and then strode in the opposite direction.

When the history of the Nobel peace prize is written, and the chronology reaches the year 2005, it may be discovered that history was in fact being re-written, for the prize for that year was awarded, in two equal parts, like some split atom, to the International Atomic Energy Agency and to its director-general ElBaradei. Having already been given a third term in office, ElBaradei was given the Nobel peace prize as an extra dollop of cream on an already over-rich Viennese sacher-torte.

But rather like Kofi Annan, ElBaradei has found the prize and its surprise filling difficult to digest. No more than Kofi Annan could prevent the UN being used as a camouflage in the war against Iraq can ElBaradei stop his IAEA being used as against Iran. The IAEA board recently overruled his recommendations that any reference to the UN Security Council of the Iranian nuclear programme should more appropriately be done after the meeting of the IAEA, currently scheduled for 6 March. He has not forgotten the IAEA inspection reports on Iraq’s WMDs, which even the Nobel committee admitted in Scandinavian English: ‘As the world could see after the war in Iraq, the weapons that were not found proved not to have existed.’

Those who had hoped that the Nobel peace prize might have helped ElBaradei to concentrate his mind wonderfully must be disappointed at his stance. In their eyes, he has turned from Becket into an archbishop too precipitately. They might wonder whether they themselves had not been too hasty in adopting him when so many others stood in line.

Could one of them conceivably have been President Pervez Musharraf? His visit on January 23-24 to Norway which otherwise has the minimal bilateral contacts with Pakistan seemed to suggest so. On January 24, he gave a speech at a seminar convened at the Norwegian Nobel Institute on the topic: ‘Pakistan’s Role for Peace and Development in the Region and Beyond.’ The official press release stressed that ‘his address to the eminent gathering at the Nobel Institute marked a unique honour for the Pakistani leader as normally the honour is reserved for Nobel laureates only.’ Understandably, the president projected Pakistan’s vital geo-strategic location, saying that his country must not be viewed in isolation but as a crucial state, priming up to be the epicentre of commerce between South Asia, the Gulf, Central Asia, and western parts of a rapidly developing China.

Might this self-perception of Pakistan’s global significance be the reason for someone expecting to be included in the short-list of runners in next year’s Nobel peace prize race? Might this be the reason why he regrets the tardy pace of India’s responses to his peace initiatives, because he knows that in the two-legged race to the podium at Oslo, one cannot be faster than the slowest in the pair?

Free speech, even if it hurts

“MORE women died in the back seat of Edward Kennedy’s car at Chappaquiddick than ever died in a gas chamber at Auschwitz.” The man who made this statement — British author David Irving — was sentenced this week to three years in an Austrian jail for violating a law that says it is a crime if a person “denies, grossly trivializes, approves or seeks to justify the National Socialist genocide or other National Socialist crimes against humanity.”

That Irving has been, and probably still is, a Holocaust denier is indisputable. In 1994, I interviewed him for a book on Holocaust denial, and he told me that no more than half a million Jews died during World War II, and most of those because of disease and starvation.

In 2000, Irving lost his libel suit in Britain against an author, and the judge in the case called him “an active Holocaust denier ... anti-Semitic and racist.” And in April 2005, I attended a lecture he gave in Costa Mesa at an event sponsored by the Institute for Historical Review, the leading voice of Holocaust denial in the US. There he joked about the Chappaquiddick line and, holding his right arm up, boasted: “This hand has shaken more hands that shook Hitler’s hand than anyone else in the world.”

The important question here is not whether Irving is a Holocaust denier (he is), or whether he offends people with what he says (he does), but why anyone, anywhere should be imprisoned for expressing dissenting views or saying offensive things. Today, you may be imprisoned or fined for dissenting from the accepted Holocaust history in the following countries: Australia, Austria, Belgium, Canada, Czech Republic, France, Germany, Israel, Lithuania, New Zealand, Poland, Romania, Slovakia and Switzerland.

Given their disastrous history of being too lenient with fringe political ideologues, it is perhaps understandable that countries such as Germany and Austria have sought to crack down on rabble-rousers whose “hate speech” can and has led to violence and pogroms. In some cases, the slippery slope has only a few paces between calling the Holocaust a “Zionist lie” and the neo-Nazi desecration of Jewish property.

And as we have witnessed repeatedly, Europeans have a different history and culture of free speech. In Germany, for example, the “Auschwitz lie” law makes it a crime to “defame the memory of the dead.” In Britain, libel law requires the defendant to prove that he or she did not libel the plaintiff — unlike US law, which puts the onus on the plaintiff - and the British recently debated the merits of banning religious hate speech.

In France, it is illegal to challenge the existence of the “crimes against humanity” as they were defined by the military tribunal at Nuremberg; another law, on the books until just a few weeks ago, required that France’s colonial history (which was not always “humane”) had to be taught in a “positive” light.

In traditionally liberal Canada, there are “anti-hate” laws against spreading “false news.” In late 1992, Irving went to Canada to receive the George Orwell Award from a conservative free-speech organization, whereupon he was arrested and deported on the grounds that his German court conviction for denying the Holocaust made him a likely candidate for future hate-speech violations.

Even in the land of Thomas Jefferson and the 1st Amendment, freedom of speech does not always ring. On Feb. 3, 1995, Irving was invited by the Berkeley Coalition for Free Speech to lecture at UC Berkeley. More than 300 protesters prevented Irving and the 113 ticket holders from entering. (That, however, is quite different from passing a law that bars him from speaking.)

Austria’s treatment of Irving as a political dissident should offend both the people who defend the rights of political cartoonists to express their opinion of Islamic terrorists and the civil libertarians who leaped to the defence of University of Colorado professor Ward Churchill when he exercised his right to call the victims of 9/11 “little Eichmanns.” Why doesn’t it? Why aren’t freedom lovers everywhere offended by Irving’s court conviction?

Freedom is a principle that must be applied indiscriminately. We have to defend Irving in order to defend ourselves. Once the laws are in place to jail dissidents of Holocaust history, what’s to stop such laws from being applied to dissenters of religious or political histories, or to skepticism of any sort that deviates from the accepted canon?

No one should be required to facilitate the expression of Holocaust denial, but neither should there be what Supreme Court Justice Louis Brandeis called the “silence coerced by law - the argument of force in its worst form.”

The point was poignantly made in Robert Bolt’s play, “A Man for All Seasons,” in which William Roper and Sir Thomas More debate the relative balance between evil and freedom:

Roper: So now you’d give the devil benefit of law.

More: Yes. What would you do? Cut a great road through the law to get after the devil?

Roper: I’d cut down every law in England to do that. More: Oh? And when the law was down - and the devil turned round on you - where would you hide? Yes, I’d give the devil benefit of law, for my own safety’s sake.

Call David Irving the devil if you like; the principle of free speech gives you the right to do so. But we must give the devil his due. Let Irving go, for our own safety’s sake. —Dawn/Los Angeles Times Service

Fighting the long war

NO one ever accused Donald Rumsfeld of thinking small — except about the number of US troops needed to secure the peace after the war he helped mastermind in Iraq. So it is perhaps no surprise that the Pentagon’s four-yearly defence review seeks no less than to define our era. The man who served as America’s youngest defence secretary during the 45-year period we remember as the cold war argues that we are now living through the “Long War”, and has set out his programme - a mixture of spin and strategy - for the next two decades.

Little of it is about the usual stuff of such reviews: plenty of ships, planes and other hardware survive intact, delighting defence contractors and Wall Street. US military thinkers are dismayed that one lesson of Iraq has not been learned and that there is no provision for putting more boots on the ground - though there are plans for smaller, agile, special forces units and better covert intelligence-gathering. This is linked to the perceived nature of the new threat: transnational terrorism - the “ism” that replaces the decades-long 20th-century struggles against fascism and communism.

It would be foolish to argue that the world’s only superpower does not need to think about security in a coherent and integrated manner. In its more modest way the UK is doing something similar, as Gordon Brown showed this week. But beyond the $513bn annual price tag for US taxpayers, there are questionable assumptions and dangers in this review.

America’s enemies may be ruthless, but are they really trying to destroy its way of life? Are Osama bin Laden and co. truly on the same level as Hitler or Stalin? Elevating terrorism to the level of an ideology risks exaggerating the importance of a modus operandi — though the fear of an Al Qaeda-type nuclear, chemical or biological attack cannot be avoided — and underplaying the need to tackle motivation. Above all is the danger that the concept of endless war will be self-perpetuating, a permanent recruiting sergeant for the jihadist cause. Root causes, it goes without saying, matter more than their symptoms, however menacing.

Many Americans who are angry about 2,200 dead soldiers in Iraq and the collateral damage caused by the “war on terror” to their own cherished liberties are unhappy enough that Mr Rumsfeld is still in charge at the Pentagon.
—The Guardian, London